The Scotts Miracle-Gro Company (NYSE:SMG) reported second-quarter results on Wednesday that came in ahead of analyst expectations, supported by revenue growth and improved margins.
Shares gained 3.18% in premarket trading following the announcement.
The company posted adjusted earnings per share of $4.53 for the quarter ended March 28, beating the consensus estimate of $3.86 by $0.67.
Revenue totaled $1.46 billion, exceeding forecasts of $1.41 billion and rising 5% compared with the same period last year.
The revenue increase was accompanied by a notable improvement in profitability, with adjusted gross margin expanding by 240 basis points to 41.8%.
“We delivered a strong second quarter, executing on net sales growth, gross margin expansion and other key financial priorities,” said Mark Scheiwer. “We are driving profitability growth and improved free cash flow while making incremental investments in consumer activation and return-generating capital expenditures.”
Scotts Miracle-Gro reaffirmed its full-year fiscal 2026 guidance, expecting adjusted earnings per share from continuing operations in the range of $4.15 to $4.35. The midpoint of $4.25 was not directly compared with a specific analyst consensus.
The company also expects U.S. Consumer segment net sales to grow in the low single digits and forecasts an adjusted gross margin of at least 32%.
Adjusted EBITDA increased 9% year over year to $437.4 million. The company’s net leverage ratio improved to 3.71x from 4.41x a year earlier, reflecting progress in reducing debt.
Scotts Miracle-Gro expects to generate approximately $275 million in free cash flow for fiscal 2026, which it anticipates will help lower its leverage ratio into the high-3x range.